Gold demand lifts profit at Chow Tai Fook to $228mn

Bloomberg

Chow Tai Fook Jewellery Group’s profit increased for a second consecutive six-month period as demand for gold products lifted sales at the world’s leading jewellery retailer. Net income rose 46 percent to $228 million in the six months through September, the Hong Kong-based company said in a statement on Tuesday. Revenue climbed 15 percent to HK$24.8 billion.
The results mirror the continued recovery in demand for luxury goods in China after a two-year slump amid a corruption crackdown in the country. Sales at the company’s stores are picking up and more customers are also purchasing its products online as the world’s second-largest economy is on track for its first full-year acceleration in seven years.
In the period, retail sales of Chow Tai Fook in mainland China increased 16 percent, and 13 percent in Hong Kong and Macau. Growth momentum was fuelled by gold products, the company said.
The current financial year “will be a turning point for our business given the nascent jewellery market recovery,” the company said.
“Although the recovery is gradual and mild, the industry is expected to return to a stable yet sustainable growth.”
The retailer expanded the number of outlets in mainland China to 2,358 at the end of September. It will continue the expansion “in view of the improving general consumer sentiment, coupled with the rising opportunities from the development of shopping malls in the region,” Chow Tai Fook said.
In Hong Kong and Macau, the company will optimise outlets in tourist centres and selectively open stores in residential neighbourhoods.
The company expects its total rent cost declining 15 percent in the current financial year, Hamilton Cheng, finance director, said in Hong Kong after the results.
Shares of Chow Tai Fook have climbed 48 percent this year, compared with the 36 percent gain in the benchmark Hang Seng Index. The results were announced after the close of trading.
Demand for jewellery, watches and clocks, and valuable gifts has been picking up. Sales of these products in Hong Kong rose 4.3 percent this year through September, compared with a 17 percent plunge in all of 2016.